Toyota Prius Hits Million-Sale Milestone in U.S.

Toyota Motor's (TM) recall woes may have pushed U.S. sales of Toyota and Lexus vehicles lower during the past year, but they haven't stopped one popular model from setting a new milestone.

Propelled in part by higher prices at the gas pump, the fuel-efficient Toyota Prius hybrid recently surpassed 1 million sales in the U.S., Toyota said Wednesday in a statement.

Since it first went on sale in the U.S. sales over a decade ago, "[the] Prius has become synonymous with the word hybrid and as we see fuel prices starting to rise again, it has accounted for more than 60% of hybrid passenger car sales so far this year," says Bob Carter, general manager of the company's Toyota division.

Worldwide, Prius sales topped the 2 million mark in October, and global sales of all Toyota and Lexus brand hybrids exceeded 3 million last month, Toyota says. The Japanese automaker's closest competitor, Honda Motor (HMC), has sold roughly a fifth as many hybrid vehicles.

Setting the Standard for Hybrids

"It's an achievement to sell a million units of a somewhat unusual looking car with a very different power train in North America," says John Voelcker, editor at GreenCarReports.com.

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For better or worse, the Prius has become both an automotive and cultural touchstone, says Voelcker. Its appeal crosses ideological divides, from environmentally conscious liberals who want to reduce their carbon footprints to conservatives who want to lessen the nation's dependence on imported oil.

Unlike cars with conventional power trains, the standard-setting Prius uses both electricity- and gas-powered engines that work in tandem to optimize fuel economy. When stopped at a traffic light, for example, the gas motor shuts down to save fuel, but quickly and quietly resumes operating as soon as the gas pedal is pressed. It's this technology that allows the Prius to achieve around 50 mpg in both city and highway driving -- impressive for a mid-sized car.
Still a Niche Seller

Beyond its enviable fuel economy, demand for the Prius has been stoked by government subsidies in several nations keen on reducing greenhouse gas emissions, among them Japan and the U.S., notes Arthur Wheaton, an auto industry analyst at Cornell University's ILR School. Generous tax credits in Japan, for example, helped propel demand for the Prius higher than for Toyota's more traditional Corolla compact, itself a huge seller.

Wheaton says that while the Prius may be popular, it hasn't sparked demand for hybrids across the industry. "It at least made the technology seem feasible," he says, "but no other car has actually been able to duplicate its success."

Still, a million-car milestone isn't all that remarkable compared to other vehicles sold in the U.S. Ford Motor (F), for example, sold more than half a million copies of its F-Series pickup line last year alone.

A good run for an automotive assembly plant is 250,000 cars a year, says Philip Gott, director of automotive solutions at IHS (IHS). But the million-Prius milestone is significant for a vehicle that set the market expectations of how a hybrid vehicle should look, feel and perform.

"To that extent, you can't take anything away from Toyota," Gott says. "They put the stake in the ground that everyone else is now scrambling around." The Prius is the car of choice for consumers who looking for a fuel-efficient vehicle and don't mind paying a bit more for it.
Toyota's Post-Earthquake Outlook

Now, Toyota's fortunes are tied in large part to the Japanese government's ability to recover from the devastating 9.0 earthquake and tsunami that struck the northeast part of the country last month, says Cornell's Wheaton. All the Japanese automakers will likely face a growing wave of parts shortages at their U.S. plants in the coming weeks -- shortages that will likely lead to shutdowns, he says.

As for production of the Prius, which is manufactured solely in Japan, Toyota's biggest issue is anticipated blackouts caused by the loss of power generation from damaged nuclear plants, Wheaton says.

For its part, Toyota said in a statement Wednesday that production of the Prius and two Lexus hybrid models -- the CT 200h and HS 250h -- continues at two plants, although at less than capacity. The automaker also said it will continue to manufacture replacement parts and parts for overseas production in Japan.

Toyota said its 13 North America vehicle plants continue to operate on normal two-shift schedules, but overtime and Saturday shifts have been canceled.